Hamilton, Bermuda (Wednesday, May 10, 2017) – Ascendant Group Limited (AGL or the Company) announced core earnings in 2016 of $13.9 million compared with $13.8 million in 2015. Bermuda Electric Light Company Limited (BELCO) reported a 36% increase in operating earnings to $24.3 million, largely due to an increase in basic tariff rates effective June 2016. AG Holdings Limited (AG Holdings) recorded a 5% increase in operating earnings to $543,000, largely due to improved performance at iEPC Limited (iEPC) partly offset by reduced earnings at AIRCARE LTD. (Air Care) caused by inventory write-downs and relocation costs, as well as decreased rental income at Ascendant Properties Limited (Ascendant Properties). The improvements at BELCO and AG Holdings were offset by a $6.0 million increase in unallocated Group expenses, in part due to accruals related to the Company’s long-term incentive program. The Company was also impacted by higher claims at the Group’s captive insurance company, Ascendant Bermuda Insurance Limited (ABIL) related to crankshaft damage on one of BELCO’s generating units.

AGL’s net income increased 43% from $17.4 million to $24.9 million, largely due to an $11.7 million gain on the sale of Bermuda Gas & Utility Company Ltd. (Bermuda Gas) partly offset by a proposed death benefit program for future retirees. In 2015, BELCO recognized a $5.0 million plan amendment gain associated with a change in the defined benefit program for a portion of the salaried employees (which will be offset in future periods by an increase of payments into the defined contribution program).

Basic earnings per share increased 46% from $1.63 to $2.38, with fully diluted earnings per share increasing from $1.62 to $2.29. The Company’s strong operating cash flows allowed for the reduction of its consolidated debt to $8.8 million, resulting in a year-end debt to total capitalization ratio of 3.3%.

The Board remains committed to a balanced capital return policy aimed at increasing total shareholder return. Over the past year, the Company has repurchased 822,817 shares, of which 595,000 shares were cancelled. Based on the Company's underlying earnings performance, strong cash flow and reduced gearing levels, the Board of Directors today approved a 50% increase in the quarterly dividend to 11.25¢ per share. On an annualized basis at today’s share price, this represents a dividend yield of 5.3%.

BELCO’s sales volume decreased 0.8% from 590 million kilowatt hours (kWh) in 2015 to 586 million kWh in 2016 on a meter-read basis. Sales to residential customers were down marginally 0.2%. Large commercial sales decreased 1.0% and small commercial, street lighting and other sales were down 2.0%. Overall fuel consumption decreased as a result of reduced generation output corresponding to the decrease in sales. Overall fuel costs decreased $15.2 million from $92.8 million in 2015 to $77.6 million in 2016. The average cost of a barrel of fuel declined from $101.06 in 2015 to $85.91 in 2016, which includes $31.79 per barrel for Customs Duty. This represents an increase of 38% in the duty from 2015. Since 2014, while oil commodity prices have decreased, Bermuda Government Customs Duty on fuel oil has increased 111%.

A key event for 2016 was the Energy Commission’s approval of a basic tariff increase for BELCO effective 1 June 2016, which allowed the Utility to achieve a 7% return on the test year rate base and will allow for an 8% return on the 2016 year-end rate base for 2017. The tariff increase was granted to permit BELCO to earn a more reasonable return on its investments and enable the Utility to maintain the current system. The Energy Commission mandated that revenues above the allowed return on capital were to be set aside in a Tariff Stabilization Fund (TSF), a balancing account that can be used to defer future rate increases. The TSF balance at year-end 2016 was approximately $6.6 million.

AGL’s non-utility companies operating under AG Holdings performed well during the year. The Group’s engineering, procurement and construction business, iEPC, realized a significant improvement in its results largely due to changes made to its charge-out methodology to its affiliates, which better reflect the value of engineering shared services, and an expansion of its support to internal and external customers. Air Care led the way with a number of large projects in progress involving LED lighting and street lighting, HVAC systems and protection systems and services. The sale of HVAC maintenance contract agreements, in decline during recent recessionary years, have begun to recover with new contracts signed and a reduction in contract cancelation rates realized in 2016. Air Care's financial performance, however, was negatively impacted by $1.5 million in non-recurring costs associated with inventory impairment and accounts receivable bad debt write offs, together with its move to a new location in the Serpentine Properties Limited’s (Serpentine Properties) buildings previously occupied by Bermuda Gas.

IFM Limited’s (IFM) profitability improved in 2016 owing to additional project work arising out of its existing facilities contract with Butterfield Bank, decreased use of subcontractors and other cost control measures and new business. In March 2017, IFM became a wholly-owned subsidiary of AGL following the Company’s purchase of Black & MacDonald Group Limited’s indirect minority share in IFM. Ascendant Properties, which owns and operates the Group’s non-utility real estate, experienced a loss due to a number of vacant rental units and the months that Serpentine Properties’ premises were vacant after the departure of Bermuda Gas and before Air Care moved into the facility.

AGL’s President and Chief Executive Officer, Sean Durfy, said “I am very pleased with the 2016 results from the Ascendant Group of Companies. Our results are a testament to the hard work and determination of our people and I would like to thank them for all their efforts and contributions.

2016 marked the beginning of significant changes both within the Group and in the external environment in which we operate.

We embarked on an invigorating slate of new corporate initiatives intended to enhance our customer’s experience with the company, improve business processes to become more efficient, increase profitability and growth opportunities. Our people are key to our future success and we have begun to focus on building a culture of engagement through new employee programs that will stimulate empowerment, accountability and pride in all we do.

Externally, 2016 saw the shift to a new regulatory environment that will introduce new protocols and procedures for the way BELCO generates, distributes and sells electricity in Bermuda. After a decade of discussions and delayed decisions, BELCO’s assets are aging and inefficient; driving up cost to the customer and increasing the risk of BELCO not being able to meet Bermuda’s future electricity demand.

We have scheduled the decommissioning of 80 MW of generation that has outlived its useful life by 2019-2020. Twenty-five percent (25%) of our transmission and distribution cables are more than 60 years old and this will increase to forty (40%) over the next 10 years.

Bermuda deserves a more reliable, safe, cost effective and environmentally friendly electricity supply than our current aged infrastructure can provide. The investment into a new generation plant, upgrading transmission and distribution assets and introducing liquefied natural gas is critical in order to meet that expectation. It represents the most prudent and cost-effective approach in addressing the risks of our aging infrastructure, while enhancing the Island’s environmental profile and minimizing electricity costs. We will need the support of all relevant stakeholders in an expeditious manner to ensure a stable and reliable electricity supply for the future”

Ascendant Group Limited’s Annual General Meeting will be held at 9:30 a.m. on Friday, June 9, 2017 at the Bermuda Underwater Exploration Institute (BUEI).

###

Ascendant Group Limited is a Bermuda-based publicly traded holding company that provides energy and infrastructure solutions. Ascendant Group Limited (AGL.BH) is listed on the Bermuda Stock Exchange (BSX) and is the parent company of Bermuda Electric Light Company Limited (BELCO), and AG Holdings Limited, which includes AIRCARE LTD., IFM Limited, IEPC Limited and Ascendant Properties Limited. For further information about Ascendant Group Limited, visit www.ascendant.bm